This has been the great soap opera of Canadian air transport. The takeover and merger ofAir Canada with competitor Air Transat. A soap opera that began in the summer of 2019 and came to an abrupt end earlier this week. The cause: the covid crisis and also the fear of reduced competition on international routes. Among the staunch opponents of such a merger are the European Union, which demanded onerous quid pro quos.
Air Canada justifies its withdrawal by pointing the finger at Europe. Air Canada's acquisition of Air Transat was in fact conditional on Commission approval...
This has been the great soap opera of Canadian air transport. The takeover and merger ofAir Canada with competitor Air Transat. A soap opera that began in the summer of 2019 and came to an abrupt end earlier this week. The cause: the covid crisis and also the fear of reduced competition on international routes. Among the staunch opponents of such a merger are the European Union, which demanded onerous quid pro quos.
Air Canada justifies its withdrawal by pointing the finger at Europe. Air Canada's acquisition of Air Transat was in fact conditional on approval by the European Commission. In an official statement issued late last week, Air Canada said it had "offered and enhanced a remedy package that goes well beyond the commercially reasonable efforts required of Air Canada under the Arrangement Agreement and what the European Commission has traditionally accepted in previous airline merger cases".
Compensation measures would have considerably compromised Air Canada's ability to compete internationallythe company added. But according to experts, such a merger would have given the new entity more than 60% of market share on the transatlantic route and on holiday destinations - the Caribbean and the United States. Unacceptable to the European and American authorities.
Any buyers in sight?
Air Transat will thus be able to continue operating its flights independently. But it can only survive in the long term by building a new alliance.. Several buyers are in the running, including the Montreal conglomerate Québécor. The company is active in telecoms, media, sports and culture.
At the end of 2020, Québécor CEO Pierre Péladeau submitted a proposal to buy back Air Transat shares for five Canadian dollars (€3.37). This represents approximately 190 million Canadian dollars (128 million euros). Now Air Transat considers this offer insufficient. The airline group estimates that it will need at least 337 million euros to get through the difficult period of 2021.
The businessman maintains that "by maintaining an independent Air Transat", his offer will ensure a "competitive market". By 2020, thehe Transat group posted revenues of 880 million euros1.7 billion, down 55.7 % compared with 2019. Business was down operating loss of 287 million euros9.2 million in 2019.
